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November 23, 2020

What Is COLA? (Cost of Living Adjustment)

COLA is an annual adjustment made towards your Supplement Security Income and Social Security benefits based on changes in the cost-of-living index. The purpose of the COLA is to ensure that the purchasing power of Social Security and Supplemental Security Income (SSI) benefits is not eroded by inflation. Starting January 1, 2014, monthly benefits will increase 1.5 percent for more than 57 million Social Security beneficiaries and on December 31, 2013 over 8 million SSI beneficiaries benefits increase for will begin. That figure is based on the percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from the third quarter of the current year. ( Keep in mind if there is no increase then there will be no COLA for the upcoming year.

How does this affect you? The adjustments are usually automatic and there is nothing that you need to do on your part. Social Security usually sends out a letter to everyone November of every year to let them know if there is a cost of living adjustment and how much it would be. That is why it is very important to keep the administration updated with any changes such as addresses and telephone numbers.

Will my benefits decrease if the Consumer Price Index decreases? Benefits will not decrease if the Consumer Price Index decreases. They will remain the same until there is an increase.

Where can I find more information about COLA? You can visit

Congress enacted the COLA provision as part of the 1972 Social Security Amendments, and automatic annual COLAs began in 1975. Before that, benefits were increased only when Congress enacted special legislation.